TMI Blog2020 (8) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... reof. Moreover, we find that the initial SCN was adjudicated by the Commissioner and the subsequent SCNs were adjudicated by lower authorities. In the interest of Justice, we hold that all the SCNs be adjudicated now by Commissioner who is competent to adjudicate the case involving highest duty. Applicability of the extended period - HELD THAT:- The appellants have taken the plea that earlier provisional assessment was made and was finalised and even under circumstances, Department has invoked extended period. We find that the submissions of the appellant that they have submitted all the details at the time of provisional assessment and the department has gone through their submissions and finalised the assessments - the submissions of the appellants have not been considered in detail in as much as the manner in which the provisional assessments were finalised have not been discussed at all. Whether M/s. HSL and M/s.HWPL are related entities? - HELD THAT:- The impugned order has not considered the submissions of the appellants on this account. It was also alleged in the SCNs and affirmed in the OIO that marketing and advertisement expenses borne by the subsidiary were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/2015 to 2/2016 SCN date 20-4-2009 18-10-2010 16-08-2013 30-07-2015 05-02-2016 22-04-2014 01-10-2014 19-09-2016 Demand Rs 2,65,39,968 17,46,141 16,28,992 42,44,211 6,50,905 31,53,535 Impugned Order 05/2010 07-06-2010 119/2018 8-2 2018 89-91/2018 24-1-2018 89-91/2018 24-01-2018 89-91/2018 24-01 2018 201/2018 27-4-2018 Penalty Rs 2,65,39,968 4,40,000 4,07,248 10,61,053 1,62,727 3,15,354 2. Learned counsel for the appellants submits that in respect of Appeal No. C/1938/2010, the demands of ₹ 2,14,83,610 and ₹ 6,48,250 were confirmed on M/s Himatsingka Seide Ltd and M/s Himatsingka Filati for the period 2003-04 to 2007-08 and demand of ₹ 44,08,108 was confirmed on M/s Himatsingka Seide Ltd for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication or processing employed in production, the amount of profit and general expenses and value or cost of other ancillary expenses; Therefore, expenses towards brand building incurred by HWPL by way of advertising and sales promotion and marketing at the behest of the Appellant and charged off in the consolidated accounts of the Appellant related to the sale and cost of subject fabrics at the hands of the Appellant and are includable in the assessable value for the purpose of payment of duty by the Appellant. 3. Learned Counsel submits on the consolidated financial statements that they essentially present a combined accounts and financial position of all the group entities, put together; the very purpose of preparing a consolidated financial statements would be defeated if expenses are booked again separately in such financial statements; it is evident from the standalone financial statements of the Appellant that such marketing/ promotional expenses has no relation, whatsoever, with the standalone Profit Loss account of the Appellant; it is necessary for the purpose of consolidation, as per the Indian Accounting Standard 110 (Accounting Standard 21) Consolidated Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dian Copyright Act, 1957, Trade Marks Act, 1999 and Rules there under; it is a settled position of law that a balance sheet entry could never become an income or an expenditure, as the case may be; it was held in Mahindra Holiday and Resorts India Ltd2018-VIL-668- CESTAT-CHE-ST, that an amount showed in the balance sheet could neither be an income nor a consideration nor a payment or the gross amount charged in terms of Section 67(a) and (c) and hence, it is nothing but a financial adjustment in the nature of book entry. ; CESTAT Mumbai held similarly in Reliance Infratel Ltd2015-TIOL- 2160; Greenwich Meridian Logistics 2016-TIOL-869; Phoenix International Freight Service Pvt Ltd2016-TIOL-2353 and Thermax Instrumentation Ltd 2015-TIOL-2376. 4. Learned Counsel submits that Marketing and Promotional Expenses incurred by HWPL are not to be included in assessable value for purpose of duty; the objective of setting up of brand Atmosphere was with a larger purpose of gaining presence in the local market in retail since the parent company as an EOU was not permitted to participate fully in the local market; HWPL was set up so as to give full attention to the domestic retail mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establish that the relationship with HWPL has influenced the price; mutuality of interest has neither been established nor evidence of flow back of money brought out and hence, undervaluation cannot be alleged; he relies upon. (i). Apsara Metallica Industries 2019 (369) ELT 1619 (Tri.-Mumbai). (ii). Bharat Petroleum Corporation Ltd2016 (342) ELT 602 (Tri.- Chennai). (iii). BPL Sanyo Utilities Appliances Ltd2007 (220) ELT 175 (Tri- Bang). 5.1. Learned Counsel further submits that learned Commissioner finds the mutuality of interest and thus concludes that marketing and promotion expenses incurred by HWPL are includible in the assessable value; English meaning of Mutuality is a reciprocal relation between interdependent entities ; therefore, for mutuality of interest to exist between two entities, there should necessarily be interdependence; mandatory condition is that one entity should hold interest in another and vice versa; Apex Court held, in the case of Kwality Ice Cream Co 2010 (260) ELT 327 (SC), that what is important is that each of the parties involved should have an interest, whether direct or indirect in the business of each other; what is of importance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , March 2003 to January 2009, the Appellant has cleared goods from their export oriented units to DTA as per the provisions and permission from DGFT authorities; appellant on their own sought provisional assessment of the goods cleared to DTA as there were no independent sales of the products in the local market; while replying to the queries, raised by the department vide letter dated November 22, 2004, they submitted that the transfer price calculated by them exceeded the value derived under the deductive method of valuation computed under Rule 7 of the Customs Valuation Rules; indirect marketing expenses were highlighted by their exclusion in the set of calculation under the deductive method and this was taken in to account while ordering the finalization of assessment vide order dated March 29, 2003; while computing under the deductive method, deductions in the form of additions usually made for profits and general expenses in connection with sales in India of imported goods of the same class or kind is allowed; the indirect marketing expenses were not incurred at the instance of the Appellant; it is an undisputed fact that the two sets of calculations were made available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting/advertising alleging that the same have been incurred on behalf of and at the behest of the appellant. The OIOs silent on as to why the said Rule 7/8 have been invoked. There is no discussion on as to why the value declared by them needs to be rejected and why it should be arrived at under Rule 7/8 of Customs Valuation Rules, sequentially proceeding with preceding Rules in terms of Rule 3. 3. Determination of the method of valuation. For the purpose of these Rules- i. the value of imported goods shall be the transaction value; ii. if the value cannot be determined under the provisions of clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these rules. 11. The impugned orders are silent as to how the appellants claim of valuation under Rule 7 was legally tenable and how Rules preceding the same are not applicable. The respective authorities have only disputed the fact that certain expenses incurred by the subsidiary on account of Marketing and Advertisement were not included and that they are related. We find that Rule 7 of Customs Valuation (Determination of Price of imported goods) Rules, 1988 lay down as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Radhakrishnan has, however questioned the aforesaid view of the Tribunal and argued that since the respondent is hundred per cent export-oriented unit, any sale or clearance of cotton fabric by the respondent to DTP should be treated as transaction sale and therefore Rule 4 would be applicable. However, this argument has to be rejected in view of proviso to Section 3 of the Central Excise Act, 1944 which reads as under: Section 3. Duties specified in the [Schedule to the Central Excise Tariff Act, 1985] to be levied. - (1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985 : Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, -- (i) In a free trade zone and brought to any other place in India; or (ii) By a hundred per cent export-oriented undertaking and allowed to be sold in India; shall be an amount e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner and the subsequent SCNs were adjudicated by lower authorities. In the interest of Justice, we hold that all the SCNs be adjudicated now by Commissioner who is competent to adjudicate the case involving highest duty. 13. Coming to the issue of applicability of the extended period, we find that in respect of the appeal No.C/1938/2010, it was contended that extended period was invocable as the appellants have suppressed the fact that the expenses on marketing and advertisement have been borne by the subsidiary who is also a buyer of the goods from the appellants and the fact that the appellants have suppressed the fact that the marketing / promotional expenses incurred by HWPL have been charged off in the financial accounts of HSL as confirmed by the auditor s report. The appellants have taken the plea that earlier provisional assessment was made and was finalised and even under circumstances, Department has invoked extended period. We find that the submissions of the appellant that they have submitted all the details at the time of provisional assessment and the department has gone through their submissions and finalised the assessments. However, we find that in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in 2015(326) ELT 633 (SC). iii. CCE, Mysore Vs. TVS Motors [2016(331) ELT 3 (SC)] iv. CCE Customs, Aurangabad Vs. Skoda Auto India Pvt. Ltd. [2020(2) TMI 1194 CESTAT, Mumbai] v. Luminour Electronics Pvt. Ltd. Vs. CCE, Delhi [2016(338) ELT 154 (Tri. Del.)] vi. Hero Honda Motors Ltd. Vs. CCE, Delhi-III [2015(324) ELT 404 (Tri. Del.)] 16. The Revenue has also alleged that the appellants have charged off such expenses in the consolidated accounts. However, the appellants submit that the consolidated financial statements are required to be prepared in terms of Section 129(3) of the Companies Act, 2013; the fact that balance sheet of the subsidiary i.e HWPL also shows the expenses on account of marketing and advertisement is ignored by the Department. We find that the impugned order has not given any findings after going through the submissions of the appellants and balance sheets of different companies. 17. In view of the above, all the impugned orders are set aside and appeals are allowed by way of remand to Commissioner of Customs in the interest of Justice. Learned Commissioner shall go through all the facts of the case; submissions of the appellant an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
